BEYOND UTILITY REACH? HOW TO CLOSE THE URBAN-RURAL ACCESS GAP

Transcription

1 BEYOND UTILITY REACH? HOW TO CLOSE THE URBAN-RURAL ACCESS GAP

2 TABLE OF CONTENTS 2 ABBREVIATIONS 4 LIST OF TABLES 4 LIST OF FIGURES 4 DISCLAIMER 6 ACKNOWLEDGEMENTS 6 1 INTRODUCTION AND RATIONALE 8 2 METHODOLOGY Sampling framework Basic data communes and piped water systems Analytical framework SECTOR CONTEXT AND INSTITUTIONAL FRAMEWORK Water Resources situation Water Supply and Sanitation Access Institutional framework Service providers Financing Water quality monitoring ANALYSIS ON RURAL SERVICE PROVISION Service levels and satisfaction Accessibility Reliability Quality Quantity Household concerns and barriers to connected to piped water networks Performance of water operators Institutional Capacity Sector framework and the role of service authorities Service providers Financing and affordability of services Financing service authorities User charges and affordability Asset management Water resource management Monitoring and regulation Sanitation services Toilets and latrines Sludge management and pit-emptying Ukraine 2

3 4.8.3 Sewerage systems RECOMMENDATIONS 49 6 BIBLIOGRAPHY 50 Ukraine 3

4 CoM DWD DWP GNI HBS HLCS MICS MinRegion MENR NERC RWS SDG SES UAH UNDP USD WSS WTP Cabinet of Ministers Drinking Water Directive Danube Water Program Gross National Income Household Budget Survey Household Living Condition Survey Multiple Indicator Cluster Survey Ministry of Regional Development, Construction, and Housing Ministry of Ecology and Natural Resources National Energy and Utilities Regulatory Commission Rural Water Supply Sustainable Development Goals State Sanitary and Epidemiological Service Ukrainian Hryvnia (national currency) United National Development Program United States Dollar Water Supply and Sanitation Willingness-To-Pay Exchange rate used: 1 Euro = 29.4 UAH 1 Table 1 - Representativeness of primary household data collection Table 2 - Basic data on communes and their service providers Table 3 Service level and satisfaction summary indicators (n=695) Table 4 Water supply operational performance summary indicators Table 5 - Financial performance data for water operators (operator survey) Table 6 Institutional capacity summary indicators Table 7 Financing and affordability summary indicators Table 8 - Typical water consumption and expenditure for water (household survey; based on invoices) Table 9 Asset management summary indicators Table 10 Water resource management summary indicators Table 11 Monitoring and regulation summary indicators Table 12 Sanitation summary indicators Figure 1 Primary data collection locations in Ukraine Figure 2 - Framework for the analysis of rural WSS service delivery Figure 3 Primary household water supply for drinking and cooking in urban and rural Ukraine (adapted from State Statistical Service, 2016) Exchange rate as of January 2017 Ukraine 4

5 Figure 4 Access to running water and sewerage systems in rural and urban Ukraine (HLCS, 2014) and Multiple Indicator Cluster Survey, 2012) (author s elaboration) Figure 5 Distribution of the distance to rural household main water source (adapted from State Statistical Service, 2016) Figure 6 Household sanitation facilities in urban and rural Ukraine (MICS, 2012) Figure 7 Water supply access across socio-economic quintiles using MICS (2012) and HLCS (2014 ) (author s elaboration) Figure 8 Sanitation access across socio-economic quintiles using MICS (2012) (author s elaboration) Figure 9 - Regional disparities in access to running water for Ukraine s regions (HCLS, 2014) (author s elaboration) Figure 10 - Institutional structure of the water supply and sanitation sector in Ukraine (R: regulation; P: Policy; I: Investment; and S: Service Provision)... Error! Bookmark not defined. Figure 11 Frequency of major service outages reported by PWS (n=19) Figure 12 - Most recent PWS water quality test results for bacteriological water quality parameters (n=6); operator survey Figure 13 Most recent PWS water quality testing results for chemical parameters (n=6); operator survey Figure 14 Daily per capita water consumption from networks (households with invoices n=42). 29 Figure 15 Concerns of households about their water supply situation (household survey; n=xx) 29 Figure 16 - Reasons of self-supply households for not connecting to piped water services (household survey; n=274) Figure 17 Collection ratio (left) and Operational cost recovery ratio (right) (operator survey n=20) Figure 18 Types of support provides by local councils to PWS service providers (n=19) Figure 19 - Types of external support received by communal water operators (n=17) Figure 20 Breakdown of reported annual expenditure for WSS (last FY) (n=20) Figure 21 Reported local council funding sources for WSS expenditures (n=20) Figure 22 - Household satisfaction (at least somewhat satisfied with sanitation facilities (n=686). 44 Figure 23 - Desires to improve sanitation facilities (n=693) Figure 24 Reasons for not having a flush toilet (n=228) Figure 25 Motivations for upgrading from a pit latrine to a flush toilet (n=228) Figure 26 Pit/tank emptying practices for flush toilet (left)) and pit latrine (right) users Figure 27 Household pit emptying practices (n=225) Figure 28 Proportion of households reporting using pit emptying services (n=218) Figure 29 Issues reported with sewerage services (n=127) Ukraine 5

6 This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. This is an unpublished report. The authors welcome comments and can be contacted through ssmets@worldbank.org. Access to full data sets can be requested by interested parties. This report was prepared by a team of World Bank staff and consultants led by Susanna Smets and comprised Elvira Broeks Motta and Andrew Shantz, and received guidance from Sana Kh.H. Agha Al Nimer. The team would like to thank partners and consultants in Ukraine who supported the coordination and compilation of secondary data and information, supervised the household surveys, and implemented the interviews with service providers and local governments, in coordination with relevant government agencies: Vita Strukova and Yaroslava Dzyra. This report is a product of the World Bank under the Danube Water Program (DWP), financed by the Austrian government. This unpublished country report has contributed to a regional report, describing through a comparative lens the results for each of the seven countries in this study: Albania, Bosnia and Herzegovina, Croatia, Kosovo, Moldova, Romania and Ukraine. The regional study was also funded through the former Water and Sanitation Program and the Water Partnership Program. The regional report can be accessed at Ukraine 6

7 Ukraine 7

8 The policies and financing frameworks for countries in the Danube region are largely driven by processes to integrate into the European Union (EU). Progress has been made on Water Supply and Sanitation (WSS) services in urban settings however fundamental service gaps remain present in rural areas often where most of the population and the poorest segments of society reside. In 2015, the Danube Water Program (DWP) 2 completed a study of WSS services in the Danube region and identified that approximately 22.5 million people remain without access to piped water supply and 28 million without flush toilet access (World Bank, 2015). The study highlighted the dual challenge that governments of the region face of meeting their citizens demand for sustainable services while catching up with the environmental requirements of the EU. Additionally, the study noted that WSS service delivery in rural areas particularly among informal or local providers of piped water and individual household supplies are poorly understood, including in Ukraine. To address such gaps, the DWP has initiated a regional rural WSS study in seven countries, notably Albania, Bosnia and Hercegovina, Croatia, Kosovo, Moldova, Romania, Ukraine (World Bank, 2018). The main objective is to examine the status of rural water and to some extent sanitation service provision, to identify bottlenecks and good practices in achieving progress on rural service delivery and formulate potential policy directions. This document presents the findings of this regional study for Ukraine and builds. The Ukraine country study has been implemented by the World Bank after consultation of the Ministry of Regional Development, Construction, and Housing (MinRegion). Ukraine is a large Eastern European country of approximately 45 million people, bordered by Russia, Belarus, Poland, Slovakia, Hungary, Romania, and Moldova. Most of its population lives in urban areas (70%) and its rural population has been steadily declining over the years due to outmigration, especially of workingage population, to urban areas (State Statistical Service of Ukraine, 2017) 3. Ukraine s rural population is not only sharply declining, but the share of population above 60 years is sharply increasing in rural areas, with younger generations looking for jobs in the cities. Ukraine s constitution recognizes four tiers of government administration: i) national; ii) regional (27 oblasts 4 ); iii) district (490 rayons); and iv) local government administrations. The country comprises of 460 cities, 885 towns, and 10,889 communes (or village councils) and there are over 28,000 rural settlements 5. Ukraine has recently experienced political and economic instability resulting from an uprising in 2014 and ongoing conflict in eastern parts of country. Severe shocks combined with a history of slow progress on structural reforms resulted in a serious economic crisis in (World Bank, 2017). As of 2016, the Gross National Income (GNI) per capita stands at 2,310 USD 6 and has contracted each year since 2014 (from 3,800 USD). The Government, which took office in April 2016, has committed to continuing reform efforts, and a government program and action plan covering a wide-ranging reform agenda was issued, updated in April 2017 with a medium-term action plan for Poverty increased significantly since 2015, with access to services and livelihoods particularly impacted in conflict affected areas. The deep recession, depreciation, and compression of public current expenditures contributed to significant contraction of disposable incomes in Ukraine. As a result, the estimated poverty rate (under $5/day in 2005 PPP) increased from 3.3 percent in 2014 to 5.8 percent in 2015 (World Bank, 2017). The estimated number of people living under the national poverty line based on the latest Household and Budget 2 A regional Technical Assistance Program focused on water services around the Danube region and supported by the World Bank and the International Association of Water Supply Companies in the Danube River Catchment Area (IAWD) 3 This includes the population of the Autonomic Republic of Crimea and Sevastopol. 4 These include 24 oblasts plus the Autonomous Republic of Crimea, Kyiv city, and Sevastopol city 5 In Ukraine, areas are classified as predominantly rural if over 50 percent of the population lives in an area with a density below 150 person per square km. Other categories are intermediate rural and predominantly urban. 6 Atlas method (current US$). Ukraine 8

9 Survey (HBS) is 8.6 percent in Poor household tend to spend a significant share on heating and housing utilities and the Government s means-tested social assistance program has been expanded to reach over 5 million Ukrainian households with subsidies to access public services, including water supply. Joblessness, access to services, social tensions, declining livelihood are impacts both felt within the conflicted-affected areas, as well as among displaced and host communities. Access to public services in rural areas are lagging behind and estimates for moderate poverty are 20 percent for rural areas as compared to 12.7 for urban areas in 2014 (World Bank, 2017) 8. In 2014, Ukraine signed an Association Agreement with the EU to promote closer political and economic links and the agreement was fully ratified in Under the Association Agreement, the Government of Ukraine has committed and started the process of transposing the Water Framework Directive, and underlying daughter directives, into national legislation. Prior to the fall of the Soviet Union in the early-1990s, the provision of potable water supply in rural parts of Ukraine functioned through the social farming sector (DESPRO, 2012). The costs associated with the operation and maintenance of rural water supply systems originated from collective and state farming enterprises, often subsidized by the central Government. Following the break-up of the Soviet Union, most water and sanitation services were decentralized and for many water supply systems - in particular those in rural areas a period of steady decline followed. Responsibility for the existing water infrastructure was delegated to local governments, but without any accompanying financial transfers or mechanisms for revenue generation in support of maintenance and replacement. As soviet infrastructure collapsed, many citizens began using individual water systems such as dug well or boreholes which may provide water of inferior quality. Against this backdrop, the access to piped water supply on premises in rural areas saw a rapid decline from 46 percent in 1995 to 28 percent in 2015 (WHO and UNICEF, 2016) Since 2014, the Government has embarked upon a comprehensive decentralization program to bring authority, resources and decision-making closer to its citizens (Carnegie Endowment for International Peace, 2017). Sub-national administrative government entities have been established at regional and district levels and amalgamated local administrative units, comprising of settlements and villages, also called hromadas, are being restructured 10. These units are beginning to elect village heads (starostas) and progress is also being made although in its early stages to generate local revenues to support service delivery, to gradually reduce reliance on inadequate central government transfers. The Swiss government is supporting the Ukraine decentralization process, amongst others, through the promotion of water supply services in amalgamated municipalities in rural areas 11. Other recent support programs to the Water Supply and Sanitation (WSS) sector are provided by the World Bank, EU, UNDP, bilateral donors, although the focus has been predominantly on improvement and investments of services in urban areas, as well as policy and regulatory support to start the alignment process with EU directives. Numerous challenges exist in the WSS sector of Ukraine, pertaining to its regulatory framework, efficiency and human resource capacities (Danube Water Program, 2015b) compounded by the fact that publicly available data and information about the sector remains weak, especially for rural areas. This study aims to characterize rural WSS service delivery conditions and performance in rural Ukraine. With a better understanding of the key bottlenecks for rural water supply, this report will discuss potential future directions 7 National poverty estimates in Ukraine are produced by the State Statistics Service of Ukraine (UkrStat) based on the quarterly Household Budget Survey (HBS). The methodology for poverty estimation is based on income and absolute poverty line, estimated at 1176 Hryvna per equivalent adult per month in 2014 ($10/day in 2011 PPP). In 2014, the most recent year of published figures, 8.6% of the population lived in poverty. The most recent HBS available for Ukraine in ECA Data Portal, is for the year This survey is also known as Household Living Condition Survey. 8 Moderate poverty using the World Bank s methodology is equivalent to around USD 8.5 per day (in 2005 PPP) In 2015 a law on the voluntary consolidation of hromadas was passed, which allows for the amalgamation of existing communities into bigger units. So far, 367 new hromadas have been formed, 25 percent of the planned total Ukraine 9

10 to improve water and sanitation situation in rural areas. The report herewith aims to contribute to the development of new national water and sanitation strategy. 2.1 Sampling framework This study combines secondary and primary data collection, the former relating to a desk review of policies, legislation, literature and secondary data sources (see Section 3) and the latter taking place in rural villages within the service areas of 20 rural water supply service providers 12. The study aims to understand service delivery models in rural areas and the services that rural households receive under such arrangements. While the focus of this study is about understanding rural water services, attention has also been directed towards sanitation services (pertaining to both on-site as well as sewer solutions). The following typologies of rural water supply service provision were studied: i. Provision of piped water services by licensed local water supply service providers; ii. Self-supply arrangements, meaning households not connected to any type of piped water system (PWS), but instead using individual supplies, typically comprising wells and boreholes. Data collection was administered using three survey instruments, namely questionnaires for: i. Households, a total of 695 households, or on average 35 per settlement; ii. iii. Local governments or communes as the service authority (20), and; Piped water system operators (20) as the service providers To focus the data-collection exercise in a cost-efficient manner, four out of Ukraine s 24 regions were selected, namely Kyiv oblast, Ivano-Frankovsk, Poltava, and Odessa, based on: a) a large proportion of population in rural areas, b) prevalence of licensed rural service providers; c) geographic spread, and d) accessibility for field interviewers. A listing 13 of all licensed water operators maintained by the National Energy and Utilities Regulatory Commission (NERC) 14 was used for the random selection of fifteen water operators, while an additional five service providers were selected among communes that were known to be in the process of community amalgamation 15. Five operators were selected for each of the four regions. Interviews with representatives of the respective commune council and water operator were arranged in advance and administered to the most knowledgeable person or persons available. 12 Rural areas are characterized by the fact that most of the residents are engaged in agriculture activities, low-rise buildings with gardens, and a small population, generally below 5,000 people (UNECE, 2013). Ukraine s definition of rural considers al settlements that are not categorized as predominantly urban (intermediate rural and predominantly rural). 13 The NERC listing of regionally licensed operators is acknowledged to be incomplete, illustrated by the fact that water providers serving communes involved in the amalgamation initiative were not indicated on the NERC list. 14 This list dates from July 2016, and includes all piped water system operators that have been issued licenses by their regional administrations. Nationally regulated urban utilities (around 150) as well as public institutions acting as service providers (military bases, hospitals, etc.) were omitted. See also (NKREKP, 2017). 15 Selected with assistance from the DESPRO programme. Ukraine 10

11 In the selected settlements within the service area of each PWS operator, individual households were randomly selected for the administration of the household questionnaire 16. Interviews with representatives of the commune council and water operators were arranged in advance and administered with the most knowledgeable person or persons available 17. The locations are indicated in Figure 1. Quality assurance measures were applied as part of the survey administration, data entry and management process 18. Out of a total of 1605 licensed communal water operators 19 in Ukraine, the sample of 20 represents 1.2% of all communal licensed service provider and 0.4% of all settlements with a functional piped water system operated by a licensed water service provider in Ukraine as indicated in Table 1 (MinRegion, 2016)). Hence, due to sampling method and size, the results are not representative for all rural water operators in Ukraine, and neither for all households in rural Ukraine. Due to the bias of selecting settlements with a licensed service provider, results are biased to reflect better service conditions compared to communes where there are no piped water service providers at all. The results are expected to provide a reasonable representation of rural localities in Ukraine where at least one piped water system is operational 20. The surveys were implemented from November 2016 till January An exchange rate of 1 Euro = 29.4 UAH was used for currency conversions throughout the analysis. 16 A listing of streets within the settlement was obtained from the Central Election Commission, along with the total number of households existing in the settlement. One-fifth of the streets were randomly selected and interviewers continued to sample (based on previously determined step interval) until the end of the selected streets, in some cases resulting in a total of more than 30 households surveyed per village. 17 And follow-up calls were carried out if needed to complete or validate data with the service providers 18 This included back-translating of questionnaires and field testing and spot-checking of the household survey. 19 As per the National report on Drinking Water Quality and Drinking Water Supply for 2015, there are 2993 utilities in 2015, of which 64 are state-owned enterprises, 1605 are communal utilities, and 1287 are systems managed by public institutions (schools, hospital, military bases). 20 Although the sample is not statistically representative of all rural Ukraine, households interviewed that are not connected to a piped water system and rely on their individual supplies (wells mostly) are expected to give a reasonable representation of this population segment in Ukraine. Ukraine 11

12 Figure 1 Primary data collection locations in Ukraine Table 1 - Representativeness of primary household data collection Criteria Number Percentage Estimated total number of rural settlements in Ukraine 28, % Total number of rural settlements with at a functional piped water system operated by a licensed provider 4,709 16% of all rural localities Total number of selected settlements for primary data collection % of all rural localities with a functional piped water system and a licensed provider Source: National Report on Drinking Water Quality and Drinking Water Supply for 2015 (MinRegion, 2016) 2.2 Basic data communes and piped water systems Table 2 includes an overview of some basic data derived from the communes and watehr operators sampled. The average population in the sampled communes is 3,794 people, as indicated by population estimates of the commune council, with an average of 1,443 households per commune. The household survey revealed an average of 2.6 people per household across the 20 communes. The size of the piped water systems is relatively large with 1,250 connections per system on average, considering they are in rural areas. The average age of the water schemes is more than 40 years and deep groundwater is the most prevalent water source used in these schemes. Sewer systems are present in half of the communes surveyed. Ukraine 12

13 Table 2 - Basic data on communes and their service providers Data Unit Total operators / communes interviewed no 20 Average population per commune people 3,794 Average number of water connections for water scheme b connections 1,250 Average age of water scheme years 41 Water sources used by water operators Deep ground water > 25 m Shallow ground water < 25 m % Surface water (river/stream/spring) Communes with at least one sewer system % 50 a Estimated from commune council interviews b Estimated from operator interviews Analytical framework The analysis with respect to the primary data collection uses an analytical framework, with eight dimensions as represented in Figure 2. Service Levels Operator Performance Institutional Capacity Financing and Affordability Asset Management Water Resources Management Monitoring and Regulation Sanitation Services Household water accessibility, reliability, quality, quantity and barriers to piped water connections, and satsfaction Business practices, non-revenue water, billing collection efficiency, cost recovery, and customer responsivenes Clarity of mandates, roles & responsibilities, service contracts, capacity and support arrangements and training, and perception on reforms Sector financing, WSS expenditures and sources of funds and household level expenditure and service affordability Presence and quality of asset inventories and mechanisms for replacement and capital maintenance Water source avalability, abstraction permits, local water conflicts, and water source reliability and self-supply arrangements Performance monitoring, tariff setting and water quality monitoring and surveilance Access and on-site mangement, willingness-to-pay, satisfaction with sanitation services Figure 2 - Framework for the analysis of rural WSS service delivery The first dimension analyses the service levels experienced by households on a variety of factors including their perceptions, satisfactions and aspirations with respect to services. The second dimension analyses the situation of the water facility/system and key performance data of the operators. The next five dimensions examine in more depth the critical building blocks or underlying factors that are important for the sustainability of service provision. The last dimension is assigned to understanding the sanitation situation in rural areas. Across the following eight sections information is used from different data sources (household, operator, local commune survey instruments and used for triangulation when possible). Ukraine 13

14 3.1 Water Resources situation Ukraine s climate is characterized by generally warm and dry summers and harsh winters with an annual precipitation ranging from mm and high variability over the years. The frequency and intensity of severe weather has reportedly already increased and climate-induced water stress is anticipated to also increase in the future with droughts being more severe and stream flows decreasing (Ukrainian Meteorological Center, 2017). Ukraine has an overall low availability of fresh water resources compared to other countries in the region, with the southern regions experiencing greater scarcity (Water for Ukraine, 2017). Internal renewable water resources equate to 1,091m 3 per capita per year which is significantly lower than the European average, while total renewable water resources availability is 3,910m 3 per capita per year in 2015, with around three quarters of river flows (e.g. Dnipro, Dniester) originating outside the country (FAO, 2017). Overall in Ukraine, the reliance on groundwater for drinking water is approximately 60% while 40% originates from surface water. Ecological status is poor for over half of its 30 water bodies, due to organic and nutrient pollution, as well as hazardous substances (ICPDR, 2017) 21. Ukraine and its upstream riparian countries are largely industrialized resulting in high levels of contamination and wastewater load due to low levels of treatment prior to discharge 22 (MinRegion, 2016). Groundwater resources are abundant in northern and western regions of Ukraine with total available groundwater resources of over 60,000 m 3 / day, and abstractions around 53,000 m 3 /day, half of which are used for drinking water (MinRegion, 2016). However, in several regions groundwater quality is impaired by geogenic and anthropogenic causes particularly in Crimea, Donbass, and Dnipro, making such ground water resources unfit for human consumption. In 2015, 33% and 18% of samples tested for point water supplies, mostly groundwater wells and springs, did not meet chemical, respectively microbiological drinking water standards and the share of test results not meeting standards for both chemical and microbiological parameters has reportedly increased since 2012 (MinRegion, 2016). Several water-related disease outbreaks have been reported in Ukraine, with some reportedly due to leakages from cesspits (STRANA, 2017). Due to agricultural practices, nitrate contamination of waterways and aquifers is widespread. Several cases of blue-baby syndrome have been recorded over the past years, such as in Poltava oblast, indicating the public health risks that come with high nitrate pollution of groundwater wells (WECF, 2007). In 2010, an order to prevent blue baby syndrome in children was issued 23. In 2015, 23% of individual springs and wells monitored did not comply with nitrate requirements, while drinking water delivered in public and private institutions 24 showed 28.5% non-compliance with nitrate standards (MinRegion, 2016). 21 The actual reliance on groundwater may even be higher as unserved households rely mostly on groundwater as well. In rural areas reliance on ground water is expected to be higher. 22 Over three quarters of surface water samples tested showed pollution loads above the drinking water quality standards (MinRegion, 2016) 23 Order No. 16 of 2010 by Ministry of Health on the Prevention of the occurrence of nitrate methemoglobin in children. 24 In total 17,000 of such institutions were monitored. Ukraine 14

15 Percentage of Households DANUBE WATER PROGRAM WORLD BANK AND IAWD 3.2 Water Supply and Sanitation Access Results from national Multiple Indicator Cluster Surveys (MICS) conducted in 2000 and 2012 showed that water supply - piped water in dwelling - at national level fell from 67.6% to 63.8% and 59.4% to 56.2%, respectively. The latest figures from the State Statistical Service indicate that access to piped water services fell from 65.1% in 2015 to 64.5% in Figure 3 presents a breakdown of household drinking water sources used in both urban and rural settings for Piped water supply network Household well Public standpipe Public well Surface water (rivers, lakes, ponds) Type of primary water supply for drinking and cooking Delivered water Other (purchased, etc) Total Urban Total Rural Figure 3 Primary household water supply for drinking and cooking in urban and rural Ukraine (adapted from State Statistical Service, 2016) A large disparity exists between urban (80%) and rural (34%) households in the use of water from a piped system for drinking and cooking (MICS, 2012), and includes any piped access, including households that have piped access into their homes from wells. Most rural households obtain drinking water from a household (private) well (55%) while public wells are rarely used. Use of piped water systems for drinking in rural areas in 2016 is significantly lower than in 2000 at 49% (MICS, 2000). Household water treatment practices are moderately common in Ukraine, with 59% of the population practicing some form of treatment - typically boiling and filtration (MICS, 2012)). However, disparities are large between urban and rural areas where 68% and 47% practice treatment, respectively. 25 The analysis in this section uses various data sources: State Statistical Service (2016), supplemented with figures from the 2016 National Water and Sanitation Report (MinRegion, 2016) and data from MICS (2012). This is complemented by the analysis of the Household Living Condition Survey (2014) by the authors. Ukraine 15

16 Percentage of Households Percentage of Households DANUBE WATER PROGRAM WORLD BANK AND IAWD Rural Connection to sewerage system Urban Connection to running water Figure 4 Access to running water and sewerage systems in rural and urban Ukraine (adapted from State Statistical Service, 2012) Access to running water in rural Ukraine is 52% (Figure 4) and is thus substantially higher than the reported use of piped water systems for drinking (34%) (Figure 3). This difference could be explained by the fact that households may not be using the piped network for drinking (e.g. drinking water from a well or bottled water instead), or households may have built individual pressurized systems sourced from private wells (and thus would be classified as running water ) 26. Reported data on connections to sewerage for rural and urban areas are 8% and 75% respectively (MICS, 2012). Although piped water access on premises in rural areas is low in Ukraine, accessibility is good, with most rural households residing within 100 meters of their primary water source (64%), the remaining one-third fetching water at moderate distance (Figure 5) <100m m m m >1000m Figure 5 Distribution of the distance to rural household main water source (adapted from State Statistical Service, 2016) Figure 6 presents a breakdown of household sanitation facilities used in both urban and rural settings. Flush toilets are very common in urban Ukraine (86%) but much less prevalent in rural areas (26%), where pit latrines dominate (largely classified as improved due to safe containment). 26 The same difference can also be observed in urban areas, with 93% having access to running water and 80% stating the use of piped water systems for drinking. 27 Adult men are more likely to be responsible for water fetching (56%) versus women (41%) in rural areas. Ukraine 16

17 Percentage Percentage DANUBE WATER PROGRAM WORLD BANK AND IAWD Flush (all) Flush to piped sewer Flush to Flush to pit septic tank latrine Ventilated improved pit latrine Pit latrine with slab Type of sanitation facility Composting toilet Pit latrine without slab Bucket Other Urban Rural Figure 6 Household sanitation facilities in urban and rural Ukraine (MICS, 2012) Inequalities in access for different water supply indicators across socio-ecoomic quintiles 28 is presented in Figure 7. Significant inequalities in access to piped water into the dwelling are evident with the bottom 40% reliant mostly on protected dug wells. However, accessibility is good for all socio-economic groups as access to running water is quite high even among the poorest quintile of the national income distribution (70%) and among those living below the national poverty line at 67% 29. In 2014, 8.6% of the population was estimated to live below the national poverty line 30. Thus, it is evident that location rural versus urban is revealing larger disparities as socio-economic status Q1 Q2 Q3 Q4 Q5 Piped Water Into Dwelling (MICS 2012) Protected well (MICS 2012) Water on premisis (MICS 2012) Access to running water (HLCS 2014) 28 For HLCS (2014) analysis is based on consumption aggregate to determine the five consumption quintiles. For MICS (2012), quintiles are composed slightly differently using asset indices (wealth quintiles). 29 National average for running water is 79%, for the poorest quintile it is 70%, while for rural is 52% (HLCS, 2014). Measured by the national poverty definition, access to running water is 67%, versus 80% for the non-poor. (author s elaboration). 30 The methodology for poverty estimation is based on income and absolute poverty line, estimated at 1,176 UAH per equivalent adult per month in 2014 ($10 per day in 2011 PPP). Ukraine 17

18 Percentage DANUBE WATER PROGRAM WORLD BANK AND IAWD Figure 7 Water supply access across socio-economic quintiles using MICS (2012) and HLCS (2014 ) (author s elaboration). Pronounced inequalities can be found for access to flush toilets and sewerage connections as indicated in Figure 8. Use of pit latrines with a slab are only common among the bottom40% while access to flush toilets and sewerage are high for the top60% of the population. The poorest quintile is not able to invest in upgrading to a flush toilet (8% access), while the overall rural average is 26% Q1 Q2 Q3 Q4 Q5 Pit latrine with slab (MICS 2012) Flush toilet (MICS 2012) Access to sewerage system (MICS 2012) Figure 8 Sanitation access across socio-economic quintiles using MICS (2012) (author s elaboration). Figure 9 below indicates that there remain substantial disparities in access to running water among Ukraine s regions, which may be driven by historic public investment levels, urban-rural population shares, overall socio-economic status And herewith households capacity to invest in individual pressurized systems where house connections to piped networks are not available. Ukraine 18

19 access to running water DANUBE WATER PROGRAM WORLD BANK AND IAWD Figure 9 - Regional disparities in access to running water for Ukraine s regions (HCLS, 2014) (author s elaboration). 3.3 Institutional framework In Ukraine, water supply and sewerage infrastructure is owned by public entities (either state or local governments) with delegated management to municipal enterprises, private utilities or state utilities, the latter are estimated to serve 59% of the population in mostly in urban areas 32. The water sector is governed at three levels in Ukraine national, regional, and local. National-level authorities set policies, oversee investment activities and regulation of larger service providers, including licensing, tariff setting, standardization, monitoring, and control. There are no dedicated national-level authorities or entities for the rural WSS sector specifically. The Ministry of Regional Development, Housing and Construction (MinRegion) is the nodal agency in the sector and sets policies concerning WSS service delivery in Ukraine, monitors the technical condition of WSS facilities, sets technical standards 33, norms, and regulations and is responsible for State program investment allocation, implemented by the utilities. In principle, all standards apply to all licensed utilities, whether they receive their operating license form NERC or from regional authorities. NERC is an independent body authorized to license larger water and sewerage utilities 34, responsible for regulation service delivery, reviewing tariff calculations based on an approved methodology and approving tariffs, as well as utility investment programs that are also approved by MinRegion. The economic regulation role of NERC does not apply to utilities licensed at regional level. Regional governments (oblast administrations) are responsible for implementing national WSS programs while developing and implementing local programs together with local government (commune) authorities. While oblast authorities are responsible for issuing water supply operation licenses to communal enterprises that do not meet the criteria for NERC licensing, they have no role in the approval of tariffs, which rests with local commune council. Regional administrations are responsible for ensuring compliance to technical regulations and standards - and for suspending and/or fining operators where there are violations. 32 While assets are not subject to privatisation, the operation and maintenance of such assets can be done by private entities (often joint stock companies) and typically through a concession and lease arrangement. 33 Technical standards concerning service levels (such as water pressure and hours of supply), treatment and delivery (equipment, materials, metering, sanitary conditions), and requirements and regulations for water source selection for centralized piped systems. 34 The criteria include those enterprises with >100,000 people served, >300,000 m3 water produced per year or in the case of sewerage, > 200,000 m3 wastewater per year. Ukraine 19

20 Local (commune) authorities, comprising of Commune Councils and their Executive Committees, are the legal owners of WSS assets within their jurisdiction and are responsible for oversight, financial support, delegation of the operation of the systems, and for coordinating regional development initiatives, including for water investments, through sub-national planning. Executive bodies of local government have the authority to approve the water tariff proposed by regionally-licensed operators (non-nerc licensed). They also approve any borrowing by the utility and operating subsidies for the utility from their local budgets. The Ministry of Ecology and Natural Resources (MENR) is responsible for the policy, rules and regulations concerning environmental protection and use of natural water resources, including those for water extraction and discharge permits. The State Environmental Inspection and the State Agency for Water Resources are responsible for implementing water resource policies and regulations at sub-national levels. The State Agency for Water Resources has established water basin management bodies and most regional administrations have water resource departments. Regulations require that operators of centralized water systems require a water abstraction permit, while private owners of individual wells do not. The main laws and regulations governing the sector are summarized in Box 1. Box 1 WSS Related laws and regulations in Ukraine 1) The Law on Drinking Water, Water Supply and Sanitation (decreed in 2000, with various amendments up to 2017) defines the legal, economic, and organisational principles associated with drinking water service delivery and aims to guarantee access to safe and high quality drinking water for all Ukrainians. 2) The Law on Housing and Utility Services, the Law on State Regulation of Communal Services, and the Regulation for the Use of Municipal Water and Wastewater Centralized Systems prescribes the legal framework for public services and their delivery to communities and households 3) The Law on the National Energy and Utilities Regulatory Commission (NERC) that established and allocates its mandate as a sector regulator (with amendments afterwards) 4) The Law on Ensuring Sanitary and Epidemiological Welfare defines the rights of citizens and obligations of public authorities, enterprises, institutions for ensuring sanitary conditions and related monitoring and enforcement measures 5) The Law on State Sanitary Rules and Regulations - Hygienic Requirements for Drinking Waters Intended for Human Consumption (approved by Ministry of Health No. 400, 2010) establishes standards and monitoring protocols for the quality of drinking water to ensure safety for human consumption. 6) The Law on Providing a Unified Approach to the Formation of Tariffs for Housing and Communal Services (Decree 869 from the Cabinet of Ministers in 2011 with amendments) defines the mechanisms for tariff calculation of public services including WSS and pertains to all licensed operators. 7) The Regulation for Wastewater and Sewage in the Settlements of Ukraine (2002) aims to prevent environmental contamination resulting from violations in the operation and use of sewerage networks and facilities while ensuring proper construction. 8) The Decree of Issuing Permits for Use of Water (approved by the Cabinet of Ministers No. 321, 2002) defines the procedures for issuing permits for water extraction and the regulations for the discharge of pollutants. 9) The Water Code (No 272 adopted on ) establishes the framework for management, protection and efficient use of surface water and groundwater. The law also regulates the extraction of water for drinking and the treatment and discharge of wastewaters in water bodies and the environment Service providers NERC maintains a listing of utility licenses on their website, including those issued by regional authorities. Records from MinRegion indicate that there are 2,993 licensed WSS service providers operating in Ukraine, of which 64 are state-owned enterprises, 1605 are communal enterprises, and 1287 systems are operated by other public entities (schools, hospital, military bases, social housing units). This list of regionally- Ukraine 20

21 licensed operators may be incomplete. Sector experts indicate that informally operated piped water systems are not thought to be common 35. Beyond this listing, there is not yet a publicly accessible system in place with basic data as well as key performance indicators of licensed WSS operators 36. Due to this weakness in data availability it is not possible to estimate with accuracy the proportion of the rural population still relying on piped water supply. Figure 10 shows that it is estimated that about 34% of the rural population have access to piped water supply through either local operators or through individual self-supply. Approximately 66% of the rural population still remain without access to piped water supply. 35 Cooperatives operating water schemes are indicated to exist under license, although no NERC listing is available. The Sanitary and Epidemiological State Service reportedly inspect around 6,800-7,000 rural water systems annually (MinRegion, 2016). Multiple systems may be managed by one licensed local provider. 36 Although few utilities are publishing their performance voluntarily on Ukraine 21

22 Estimated structure of services delivery for piped access in rural areas in Ukraine 66% 34% % rural piped from local operators and individual self-supply % rural non-piped Figure 10 Estimated structure of services delivery for piped access in rural areas in Ukraine. Source: World Bank elaborations on estimates based on national reports and national survey data; World Bank (2018). Decree No. 869 of 2011 defines the approach for the formulation of tariffs for licensed WSS service providers and in principle is applicable to all licensed operators, including those with licenses issued by regional administrations 37. However, for small operators, such tariff guidelines are complex and mostly not followed, resulting in low cost recovery and the prevailing practice of allocating operating subsidies from local budgets as stop-gap measures. The situation of operational rather than capital costs subsidies is mirrored among NERC regulated utilities (World Bank, 2015). The 2016 Program of Activities of the Cabinet of Ministers 38, referencing the EU Association Agreement, includes measures to reform public communal services, a.o. use of commercial accounting, debt management of utilities, transparency in tariff formation and targeted assistance for customers requiring social protection. There is no state-sponsored nation-wide capacity development program for utilities in Ukraine. Professional utility associations, such as the Ukrainian Association of Water and Sewerage Enterprises and the Ukrainian Drinking Water Association, are engaged in capacity building and the industry s overall business development, although their membership base consists mostly of NERC regulated utilities and omits service providers in rural areas. Other activities include the promotion of European standards, dissemination of best practices, knowledge sharing, and policy influencing Financing In 2005, the Government took a major step towards reforming the sector when the State Drinking Water Program for Ukraine was approved (Government of Ukraine, 2006). The Program included a set of measures to improve WSS services including the construction and rehabilitation of drinking water, sewerage systems and wastewater treatment plants, and measures to harmonize legislation with the relevant requirements of the EU (a.o. development of sanitary protection zones, improvement of drinking water quality monitoring). While the required funds to reach Ukraine s targets were estimated to be in the order of Euro 6 billion, the period witnessed only a 20% level of implementation (World Bank, 2015). Due to poor implementation and the realization that proposed investments were insufficient, a revised State Program of Drinking Water in Ukraine was issued, with a total budget of UAH 9.5 billion 39, a third to come from state resources and the remaining from regional and local (or other) sources (Council of Ministers, 2011). However, only UAH 66.5 million, 5.6% of the Program amount for this period, was made Before the economic crisis, in 2011 prices this was equivalent to EURO 0.9 billion. (UAH/ EURO exchange rate in 2011 was around 10) Ukraine 22